The FEZ is not the know-how of the government of the Emirates, but an example of how, using a long-invented idea, it is possible to build an economic system almost from scratch in a couple of decades and bring it to a level where only a lazy person does not try to transfer his business into it. Today, more than 50 FEZs have been formed in the Emirates, half of which are in Dubai. At the same time, new ones are being built, for example, Dubai Energy City, Dubai Aid City. How to open a company in Dubai in the free zone, how much does it cost, who to consult? You will find answers to these and other questions in this article.
This is a territorial community, within which its own laws of doing business operate, which differ depending on the type of free zone (free zone). Common features include a simplified registration procedure, the absence of bureaucratic barriers. Foreigners have the right to 100% ownership of the enterprise. But the main thing is zero income tax, which makes any business profitable and highly profitable. Financial and economic flexibility of the economy, strict compliance with laws, as well as tax preferences attract thousands of companies from different countries here: from start-ups to giants such as ASUS, Red Bull, Rolls-Royce.
Each frison is autonomous and has its own corporate regulation. This means that each of them imposes different requirements on the founders of commercial structures. For example, for accreditation, some require a visa, the introduction of authorized capital, while others do not have such a rule. Somewhere, having issued a virtual office, you can get six visas at once, somewhere – only two. In some areas there are no warehouses, in others there is a restriction on the conduct of certain types of entrepreneurship, in others – a local partner is needed.
What advantages does the frison company get, and what are the disadvantages?
- simplified registration;
- exemption from most taxes for 50 years;
- absence of bureaucratic red tape;
- free, unlimited withdrawal of capital abroad;
- stability banking system;
- highly developed internal infrastructure;
- low costs for conducting business transactions;
- reliable personal data protection system;
- guaranteed legal protection of business interests;
- the possibility of issuing resident visas for employees and shareholders.
- restrictions on working within the state;
- higher costs for accreditation and business activities;
- stricter audit requirements;
- VAT: it must be paid.
The above pros and cons are common to all free territories, but each one also has its own peculiarities. Among the positive ones are the proximity to the airport or the seaport, land plots for development, the concentration of qualified personnel. Among the negative ones are restrictions on certain types of entrepreneurship, requirements for the presence of a physical office.
Advantages of some UAE FEZs
Let’s consider individual advantages on the example of specific frisons.
- advantageous location in relation to the Umm Al Quwain market;
- proximity to the sea and two air ports;
- benefits in the seaport for SEZ entrepreneurs.
- land is provided for development;
- proximity of power plants;
- possibility of industrial development.
- is located at the airport;
- the cost of check-in is low compared to Dubai and Abu Dhabi.
- access to the academy of vocational education, to special sites for shooting films;
- 30% discount from the metropolitan cinematographic commission on production costs.
Onshore, offshore, branches
According to international legal practice, the concept of “onshore” is applied to enterprises:
- registered in the territory of a state (in our case, the UAE) that provides preferential exemptions, but conducts its activities outside of it;
- established in a specialized jurisdiction;
- organized within a free economic zone;
- registered in jurisdictions with developed economic and financial markets.
Onshores enjoy an increased reputation, unlike offshore, because they are not perceived by the international business community as a tax haven, where there are always gray schemes of work.
Two types of onshore can be registered on the territory of the Emirates:
- FZE is a separate legal entity that is a resident with one shareholder.
- FZ-LLC is the same, but with several shareholders. Firms of this type in a number of frisons have the right to include only the abbreviation LLC in the name. This should be considered as an advantage, since abroad such an enterprise is considered not as an onshore, but as a local one, which further raises its prestige and strengthens the partner’s trust.
Both types of onshores have the right to work within the community and outside the Principality.
A branch is a subsidiary branch of a larger commercial structure. With this form of registration, the organization has the right to the types of activities stipulated in the charter of the parent company.
Offshore is a separate legal entity that is not a resident, with the right to work outside its jurisdiction.
Special companies created to fulfill the narrow tasks outlined in its charter. Such organizations are a special purpose tool. An example is the Restricted Purposes Company in the Ras Al Khaimah International Corporate Center, specializing in transportation.
When is it advisable to open a business in a FEZ?
If you intend to do business:
- In the domestic markets of the principality or the Gulf states that are members of the GCC, then open your business in the main territory of the Emirates.
- Inside the FEZ and outside the Principality, open a representative office in Frison.
- Only on the international market, then an offshore located in a free economic community is best suited.
Licensing of a business is a prerequisite for its opening. Some communities have a narrow specialization, for example, pharmaceuticals, IT, cars, others are universal: you can engage in any type of commerce there, but each of them requires a special license. All types of license permissions can be divided into three groups:
- commercial, allowing to engage in trade (general trade license allows you to sell any goods, special – only certain types);
- industrial, giving the right to start production with the only condition that it does not harm the environment;
- for the provision of services, which include legal, consulting, medical, auditing, educational.
What are the differences between enterprises established in the frisons and those that operate outside them?
They have different capabilities and have their own limitations. The former have the right to work in the territory of the Frison or outside the Emirates, but cannot engage in commerce in other parts of the country without the participation of a local representative. If the organization is accredited in the main territory of the Principality, then a foreigner has the right to engage in any activity, but for this he is subject to restrictions as the rightholder of the company: by law, he has the right to own only 49% of the shares, the remaining 51% should belong to a local resident.
Government support measures
Government agencies are interested in as many investors from different sectors of the economy as possible moving to their country so that people can work quietly and develop the domestic economy. All conditions are created for this:
- tax benefits are provided;
- a comfortable household environment is created;
- registration and customs procedures are simplified;
- various additional support programs are being developed, for example, if an entrepreneur issues a resident visa, then together with it all family members and even housekeepers have the right to come with him;
- strengthen the reliability of the banking system.
Each frison, functioning autonomously, in addition to general support measures, implements its own: conducts webinars that introduce living and working conditions in the free economic community or educational topics, forums, organizes hotlines that respond around the clock to all questions that arise from entrepreneurs at all stages of paperwork and physical relocation. Some communities have opened representative offices outside the UAE. This is an effective advertisement and at the same time a supportive measure for interested foreigners.
There are two registers in the country where the data of entrepreneurs are entered: open and closed. In the first, all the information is posted on the Frison website and is publicly available. The second register is available for study only to representatives of the police, migration service, tax authorities and only on target request.
Mandatory requirements when registering a company in the free zone in the UAE
Each community has its own list of rules and requirements, which can be found on the official website. But there are also common ones, among them the need to provide:
- information about shareholders and director;
- the charter and memorandum of the organization;
- permits for the right to conduct commercial activities;
- a package of documents including certificates, certificates, permits from relevant departments, approvals.
It will be different everywhere, because it consists of a large number of items that require payment.
- Registration fee. It is paid once when issuing permits. Depending on the selected community, it can be from 4500 to 30,000 AED.
- The cost of the license. It depends on the type of activity and the zone. For example, a general trading license can cost from 17,000 to 50,000 AED, depending on what you are going to sell.
- The authorized capital. This item of expenditure is not in all friezes. But where there is, the amount varies from a symbolic 1,000 AED to 300,000 AED.
On the territory of the Principality there are hundreds of consulting agencies providing services for:
- selection of a frieze;
- collection of a package of documents;
- registration support;
- search for a local intermediary (if necessary), etc.
If you are interested in the early accreditation of the company, do not want to waste time studying laws and regulations, collecting documents, communicating with the authorities, etc., it is advisable to seek advice from a specialized legal service.
At the first meeting, it is enough for you to state your intentions, explain what you would like to do and what result you expect. The legal adviser will explain all the nuances to you. It takes 3-4 weeks to open a firm through the mediation of lawyers who are well acquainted with the legislation and the specifics of doing business. The team of specialists will also help to open a bank account, issue a license permit, a visa, and, if necessary, can continue to act as a consultant and intermediary in communication between the client and government agencies.
Frequently Asked Questions about frison companies
Without involving a local partner, it is possible to work only within the zone in which the company is accredited. To work in other communities, a local intermediary is needed.
First of all, it depends on the type of activity, since most of the frison has a narrow specialization. But for a specific type of entrepreneurship, it has all the conditions. Also pay attention to:
- access to infrastructure facilities: warehouses, highways, airports, sea harbors;
- proximity to the workforce of the right qualifications (in Dubai and Abu Dhabi, this is much easier than in other places);
- the level of expenses (in Dubai they will be the highest).
In addition, there may be other factors that are important for your business.
How to speed up the opening process?
If you deal with the issue yourself, the process may take a long time, because in the UAE there are not only written laws, but also unwritten rules of doing business, which are strictly observed in the Arab world. In addition, in addition to the basic documents, additional papers, certificates, permits are often required. Their registration will take some more time.
It is most expedient to contact a legal advice specializing in assistance in registration of commercial organizations. They have experience, proven schemes, which ultimately reduces time costs.
How long does it take to open a company in the Dubai frizone?
Depends on the zone and the profile of the organization. The accreditation of a commercial enterprise takes no more than 2 weeks, but the opening of an industrial or medical facility is often delayed for 30 to 40 days.
The lower the cost, the less rights the company will receive. The restrictions relate to access to infrastructure, markets, services, and benefits. The most expensive emirates are Dubai and Abu Dhabi: opening, doing business, and living are more expensive here. It is possible to answer the question more precisely only by knowing all the nuances of the case.
First you need to decide: not needed at all or for a while. In the first case, the company must be closed. To work, you need a license, it is done once a year. If this is not done, it is automatically canceled, i.e. it is no longer possible to work, but the company still exists. This will raise questions from regulatory authorities, banks, fines and other troubles are possible.
In some frizones, entrepreneurs are granted the right to temporarily suspend a license when employees are fired, but the company is not closed, but assigned the status of “sleeping” to it.
No. If you chose an economic community incorrectly during registration, you will have to close this organization and open another one in a more suitable FEZ.
Completely – no. A consulting agency can do everything in terms of collecting and processing documentation, but each document must have the personal signature of the founder, so he will still have to come to the UAE.